Time Warner Cable, CBS at odds over distribution deal

Although neither side is taking shots at each other publicly, there is an undercurrent of tension between Time Warner Cable and CBS Corp. as the two companies attempt to negotiate a new distribution deal.

Time Warner Cable’s agreement to carry CBS-owned TV stations including KCBS in Los Angeles, the basic cable channels CBS Sports Network and Smithsonian, and the pay network Showtime expired at the end of June. Since then, there have been a couple of extensions, the latest one running to a few days before the end of the month.

It has been several years since Time Warner Cable and CBS sat across from each other at the negotiation table. The price the cable operator is paying now for the CBS stations is well under $1 per-subscriber, per-month, a person familiar with the matter said.

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CBS is looking for a hefty increase. Chief Executive Leslie Moonves has not been shy about making the case that the network should be getting more than popular cable channels. TNT, for example, gets over $1 per-subscriber, per-month, according to industry consulting firm SNL Kagan.

Time Warner Cable is likely eager to get a deal done now because in a few months football will be back and the last thing the cable operator wants is to lose CBS stations that are carrying games.

Conversely, CBS knows that the closer the first games get without a deal, the more leverage it has in the talks.

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That said, if sports fans lose football, expect certain members of Congress to use the business dispute as a opportunity to grandstand, attack both companies and demand government action. That is the risk the firms take if they go past the point of no return.

CBS has yet to have a so-called retransmission consent negotiation reach the point where its signal went off a pay-TV distributor because of a contract dispute.

Another component complicating these talks is Showtime. Because it is a premium channel, consumers opt to subscribe to it rather than having to take it as part of their pay-TV package. It is unlikely that Showtime would be yanked along with CBS’ other channels as such a move would take money out of both companies’ pockets.

Neither side is commenting publicly on the negotiations.

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